UK ‘losing billions’ of trade a year, claims Heathrow

Heathrow claims the UK is losing up to £14bn worth of trade a year because of a lack of air capacity in the south east.

In its report submitted to the government’s new Airports Commission, it said this figure could almost double by 2030 unless it is allowed to expand or a new hub airport is built.

The report, One Hub or None, claims it is vital for the UK to have a single hub rather than a split hub, such as the proposed Heathrow-Gatwick operation, dubbed Heathwick. 

"Hubs rely on the ‘home carrier’ to support them. The UK only has one major network carrier, British Airways. A dual hub using Heathrow and Gatwick was tried by BA in the 90s. It didn’t work," said the report.

"BA has since taken every opportunity to consolidate its operations at Heathrow, where it can reap the synergies of single-hub operation and use the transfer traffic to support routes. Without a major network carrier at a new, second hub other airlines won’t locate there since they won’t have the home carrier’s short-haul network and transfer passengers to support their long haul operations.

"Hubs must have an efficient – and quick – way for passengers to transfer between flights. The best European hubs can transfer passengers between planes in 45 minutes. A link between Heathrow and Gatwick would mean passengers spending 100 minutes moving between planes. That is simply too long for a ‘Heathwick’ type solution to be competitive. And that is before looking at the additional complexities of how to transfer bags reliably or the cost of the link."

The report, which was welcomed today by Virgin Atlantic, claim’s UK’s connectivity needs can only be met by a single UK hub airport, which means either expanding Heathrow or replacing Heathrow with a new hub airport. It claims "beyond doubt" that it is impossible for other non-hub airports such as Gatwick, Stansted or Birmingham to close the £14bn trade gap.

"Heathrow operates at 99% capacity. There is no room to fit in new trade routes to the emerging economies which are important for future economic growth," states the report. "That lack of capacity is affecting the UK’s competitive position. Last year there were 1,000 more flights to the three largest cities in mainland China from Paris and Frankfurt than there were from Heathrow.

"One year on, that number has risen to 1,532. The UK’s connectivity gap with China has also widened in terms of destinations as well as number of flights.  UK businesses cannot fly directly to seven destinations in mainland China – Chengdu, Hangzhou, Wuhan, Xiamen, Nanjing, Shenyang or Qingdao – that are now served by other European hubs."

The report claims that daily direct flights bring in 20 times more trade than non-direct or less frequent services. "Only a hub airport can provide these links. Hub airports use transfer passengers to pool demand from different countries to support direct and daily long haul routes that would not be viable using local demand alone. Point to point airports, which rely on local demand, cannot support these routes."

While welcoming the growth of point-to-point and regional airports, Heathrow claims they cannot solve the lack of capacity. Heathrow serves 75 destinations that are not supported by any other UK airport.  "Only a hub airport can provide the range and frequency of long-haul direct services that UK air passengers want," it said.   

Heathrow chief executive Colin Matthews said: "If anyone was still in doubt about the importance of aviation to the UK economy, today’s report should lay those doubts to rest.

"The new work we are publishing today shows that only a single hub airport can meet the UK’s connectivity needs and the choice is therefore between adding capacity at Heathrow or closing Heathrow and replacing it with a new UK hub airport."

Responding to the report, a Virgin Atlantic spokesperson said: "The UK needs one hub airport, with sufficient capacity to allow the UK to be competitive and reap the benefits of the connectivity air transport provides. 

"Whether that’s at Heathrow or elsewhere, is up to the Davies (Airports) Commission and the Government to decide.  What they must recognise is that, unlike for other transport modes, it will be airlines and their customers who will pay for any new infrastructure.  This means that new capacity will be built where businesses, holidaymakers and UK visitors most need it."